By John M. Connor (American Antitrust Institute)
The Auto-Parts Supercartel comprises 70 to 80 interconnected, international, automotive inputs, bid-rigging schemes discovered during 2008 to 2017. Almost half of the convicted companies were Japan-based parent firms or their subsidiaries. The connections among the cartels are provided by overlapping corporate memberships and by the targets of collusion, 17 Original Equipment Manufacturers (OEMs) of automotive vehicles.
Experienced antitrust officials have asserted that the Supercartel is the largest constellation of cartels ever tackled by the world’s antitrust authorities. The truth is that “it depends.” In terms of the number of firms and individuals convicted, it is indeed the biggest; measured by affected sales and monetary penalties, it appears to be a close second.
The origin of these cartels is rather mysterious. Most cartels are formed after a sustained period on falling prices and profits, but not Auto-Parts. Outside of East Asia, auto manufacturers have long placed strong pressures on their suppliers to reduce prices of their inputs through competitive bidding. In Japan, customary OEM loyalty to suppliers began to break down in 1999, and the great majority of the cartels were launched during 1999-2006. Did the assemblers push too hard on price reductions in the early 2000s, and thereby trigger supplier collusion to cope with an existential threat?
At last count 18 jurisdictions vigorously prosecuted this supercartel, which demonstrated exceptional duration, global reach, size, and injuriousness. Estimates for affected commerce of the Auto-Parts supercartel range from $3.2 to $5.0 trillion. There are few reliable estimates of overcharges, but averaging the few preliminary estimates suggests that injuries are in the range of $0.6 to $1 trillion.
Antitrust enforcement aimed at this supercartel is nearly complete as of early 2019. Canada has definitely closed all Auto-Parts cases. In the United States, because of the U.S. five-year statute of limitations, the DOJ’s investigations of auto-parts cartels began winding down in late 2015. Corporate indictments elsewhere appear to be over. Although it is possible that the DOJ may nab a couple of the 60 Auto-Parts fugitives and seek their extradition, further convictions of individuals in the United States are unlikely. The status of several mature EC investigations suggest that most have been closed. Brazil and Mexico still have 20-plus investigations open in 2019.
On the one hand, more than $20 billion in penalties has been imposed on nearly 300 corporate cartelists. About half of those penalties was extracted through private damages suits, which is high by historical standards. Nevertheless, the severity and deterrence power of corporate penalties are notably weak. Even if monetary penalties rise well above the current $20 billion total, deterrence of collusion is highly unlikely. On the other hand, indictments and sentencing of hundreds of individuals in the automotive industries may have lingering lessons for would-be cartel managers.
Featured News
CVS Health Explores Potential Breakup Amid Investor Pressure: Report
Oct 3, 2024 by
CPI
DirecTV Acquires Dish TV, Creating 20 Million-Subscriber Powerhouse
Oct 3, 2024 by
CPI
South Korea Fines Kakao Mobility $54.8 Million for Anti-Competitive Practices
Oct 3, 2024 by
CPI
Google Offers Settlement in India’s Antitrust Case Regarding Smart TVs
Oct 3, 2024 by
CPI
Attorney Challenges NCAA’s $2.78 Billion Settlement in Landmark Antitrust Cases
Oct 3, 2024 by
nhoch@pymnts.com
Antitrust Mix by CPI
Antitrust Chronicle® – Refusal to Deal
Sep 27, 2024 by
CPI
Antitrust’s Refusal-to-Deal Doctrine: The Emperor Has No Clothes
Sep 27, 2024 by
Erik Hovenkamp
Why All Antitrust Claims are Refusal to Deal Claims and What that Means for Policy
Sep 27, 2024 by
Ramsi Woodcock
The Aspen Misadventure
Sep 27, 2024 by
Roger Blair & Holly P. Stidham
Refusal to Deal in Antitrust Law: Evolving Jurisprudence and Business Justifications in the Align Technology Case
Sep 27, 2024 by
Timothy Hsieh